How Americans are responding to the ‘affordability crisis’
American consumers aren’t feeling great about the economy or their own finances, with the phrase “affordability crisis” dominating headlines and political campaigns for the past few months.
Majority of Americans surveyed (70%) Marist poll More than 1,400 adults surveyed in December say the cost of living in their area is either very unaffordable or unaffordable at all for the average family.
President Donald Trump calls the word “affordability” a “Democrat scam” speech at the beginning of decemberother politicians insisted it was an issue for their voters.
“The affordability crisis is not a hoax, it is a reality felt by Americans everywhere.” Rep. Sarah McBride, D-Del. he said a newsletter.
Nearly half of Americans say their financial situation is worse than it was a year ago. Credit Karma research to create. Consumer sentiment fell 29% in December compared to 2024. University of Michigan’s monthly survey.
While there is a decrease in annual inflation historical peaks The US has seen prices of daily essentials remain high in 2022 and continue to rise in some categories. In November 2025, coffee prices rose nearly 19% from the previous year, while the cost of beef increased nearly 15%, according to Bureau of Labor Statistics data.
Housing costs It increased by more than 14% between September 2023 and September 2025, according to Bureau of Labor Statistics data. medical costs increased by approximately 7% in the same period and costs for services It increased by over 8 percent. While some of these price increases are related to supply issues, Trump’s tariff agenda has also pushed up prices on essentials like bananas and coffee and discretionary items like toys and electronics.
“It’s not like people are overspending,” says Joey Khoury, partner and senior wealth advisor at Mission Wealth. He adds that middle- and low-income earners are not particularly “spending lavishly,” but as living costs rise, it becomes harder for them to stay within their normal budgets.
Consumers ‘trying to gain power’
Consumer spending increased every quarter Bureau of Economic AnalysisDespite deteriorating sentiment and weakening consumer confidence, according to The Conference Board monthly survey.
“What we’re seeing is that there’s still inflationary pressure across the system, particularly in the retail environment, and through our research, consumers are telling us that they’re trying to get through that effectively,” says Will Auchincloss, Americas retail industry leader at EY-Parthenon. “They’re trying to get the things they’ve always bought or wanted to buy, but even at higher prices.”
High-income earners may cut back on some nonessential foods, including vitamins and supplements, or turn to lower-cost alternatives, he says.
But low-income earners “are not just talking about withdrawal,” he says. “They are actively withdrawing and struggling to make ends meet.”
“Consumers are balancing many pressures, including tariffs, sticky inflation and a softening labor market,” says Leanna Haakons, business development and marketing expert and president of Black Hawk Financial.
At the same time, “they are still looking for a sense of normalcy and value in their purchases,” Haakons says. For some households, that means they’re being more selective about what they buy, he says.
“Consumers are buying fewer items overall, but they are focusing on high-value, more meaningful purchases, durable goods, gifts, home goods, home upgrades and things that are truly valuable to their daily lives,” Haakons says.
Some people borrow money to make ends meet
Although they spend regularly, many consumers also rely on credit cards and use buy now, pay later (BNPL) loans to finance their purchases.
Credit card debt in the USA has increased to $1.23 trillion as of the third quarter of 2025. New York Fed data. A growing number of Americans say they use BNPL plans to pay for groceries, according to an April survey from LendingTree.
“Consumers are increasingly taking on debt to meet the spending challenges they face, and this clearly cannot continue indefinitely,” says Auchincloss.
Increasing consumer shares as of the fourth quarter of 2025 are already changing behavior McKinsey & Company research.
Almost a third (29%) of adults say they tapped into their savings in the last three months, up from 26% in the third quarter. Another 29% say they have reduced their savings rate, which was 26% in the third quarter. According to McKinsey, 28% use credit cards more than 26%. BNPL usage also increased by percentage points during the same period.
Same problem in new year
Consumers are hopeful they will be able to find their finances in 2026, and many are optimistic about reaching their goals, according to a Credit Karma survey. Still, 32 percent of Americans expect things to get worse in the new year, according to a recent survey Bank rate survey.
Experts at real estate firm Douglas Elliman recently told CNBC Make It that rental prices could fall in 2026. However, overall inflation is expected to remain at 3% or above throughout the year. Economists at Deloitte And Fitch Ratings to guess.
“The smartest approach for households heading into 2026 is to be selective about spending and prioritize debt repayment as we head into the new year,” says Haakons. It encourages people to pay off credit card balances and take advantage of potential interest rate reductions later in the year by trying to “smartly” time large purchases.
“It’s important to be cautious as we move into 2026,” he adds, “because there are some strong signals that there may be tougher times ahead in terms of employment.”
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